Survey: PE Portfolios on the Mend
A new poll from RSM McGladrey and McGladrey Capital Markets points to a shift in focus for private equity.
May 20, 2010
Private equity portfolios are on the mend. At least that's what senior executives at PE firms believe, according to a recent survey conducted by RSM McGladrey and McGladrey Capital Markets.
Of the 148 private equity professionals polled, 56% cited expectations to complete between two and five add-ons in 2010, while 43% forecast plans to make a minimum of two to three new platform investments. The survey seems reflect growing optimism in the asset class regarding the state of legacy holdings and underscores a desire to get back to dealmaking.
Of course, the market is not without challenges, as respondents identified accessibility of financing, valuation discrepancies and a lack of attractive targets as among the lingering issues facing sponsors.
Moreover, beyond the M&A landscape, sponsors are facing other hurdles in the form of frayed relations with their limited partners. More than three quarters of those polled said they were at least somewhat concerned about the implementation of clawback provisions, while 32% cited that they were "very concerned." Along these same lines, 67% expressed concerns about changes in management fees.
This, said RSM McGladrey managing director Bob Jensen, stems from the poor performance of the asset class over the past few years.
"When portfolio company performance declined and investment returns suffered, LPs became noticeably less tolerant," Jensen said in the press release announcing the findings.
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